Endogenous Risk and Growth
While much of recent growth literature has focused on innovation in the technology frontier, less attention has been paid to the role of the least productive agents in generating growth. We develop an analytically tractable model where growth is created as a positive externality from risk taking by individuals at the bottom of the productivity distribution learning from more productive agents. Heterogeneous firms choose to produce or pay a cost and search for a better opportunity within the economy. Sustained growth comes from the feedback between the endogenously determined distribution of productivity, as evolved by past search decisions, and an optimal forward looking search policy. The growth rate depends on characteristics of the productivity distribution, with a thicker tailed distribution leading to more growth.
Year of publication: |
2012
|
---|---|
Authors: | Perla, Jesse ; Tonetti, Christopher |
Institutions: | Society for Economic Dynamics - SED |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Equilibrium Technology Diffusion, Trade, and Growth
Waugh, Mike, (2013)
-
The Growth Dynamics of Innovation, Diffusion, and the Technology Frontier
Perla, Jesse, (2014)
-
Endogenous Growth and International Technology Diffusion
Waugh, Michael, (2012)
- More ...